Systematically tracking and reporting contract financials is a crucial strategy for healthy contract lifecycle management. Organisations benefit from a contract management software platform that permits them to keep track of transactions, run reports on key financials data, establish alerts for thresholds, and perform financial statistics analytics for contracts. This blog demonstrates how leading source-to-contract management software can help organisations manage contract financials carefully and proactively in one centralised solution to maximise spend and increase ROI.
Contract financials: where to start
Leading-edge contract management software allows you to set a contract budget amount in a corresponding data field. If the budget is to be incremental, contract management software users can use a budget sub table to track individual components of an overarching contract budget.
Once an amount is set, you should be able to track transactions. For example, Contract Insight® from Four allows users to leverage a Financials page to track transactions related to contracts, such as payments, income etc.
The primary fields on the Contract Insight financials page are configurable, so you can establish fields for specific information related to your organisation’s needs – such as entity assignments, GL codes and more. Furthermore, Contract Insight supports integration with leading financial and ERP platforms so that you can streamline data input by feeding data into your Contract Insight system straight from the financial tool you’re using. You can also bulk import transactions from spreadsheets.
Entering a financial record
Contract Insight software makes entering a financial record easy. Say an organisation has entered into a consulting agreement and needs to track expenses related to procured consulting services. Assume the budget for said consulting agreement is £150K, and the aforementioned payment for procured consulting services is £25K. In this case, the organisation would add an expense of £25k. Credit/income for refunds, rebates and other similar transactions can also be logged within the system.
Additionally, your users can provide other information about transactions for your organisation’s records. When finished, the record can be saved.
Once a financial record is saved, it can be viewed among other transactions on the Financials page – providing teams with an easy-to-understand overview of financial transactions related to a contract. And display filtering functionality makes it easy for users to navigate quickly to the necessary data – saving valuable time.
Contract financial summary reports
Trusted contract management software can also provide financial summary reports for contracts.
Financial summary reports within Contract Insight proffer contract details and essential information at a glance, such as:
- the total sum of income transactions
- the total sum of expenses
- the total budget amounts
- the total budget amount remaining
- and the total percentage of your budget amount that has been used.
Contract Insight users can also leverage the budget percentage used field to set thresholds for contracts. For example, an alert can be configured so that a contract’s owner will be notified once the budget amount used has passed 75%.
Along with reported data about a specific contract record, organisations can also run reports that provide the financial summary of all contracts within a system. These holistic financial summary reports can be set to run by category – such as by contract type, contract department, counterparty etc.
Visually engaging financial tools for contract analytics
Organisations using credible contract management software solutions can equip themselves with tools that allow users to analyse contract financials at a glance. Tools like this support an innovative and future-minded contract analytics process.
Contract Insight, for example, provides executive graphical dashboards for improved financial tracking. Dashboards are available by contract status, and various dashboards can be assigned to different system user groups. For example, your system can be configured so that users from the finance or accounting departments see request alerts relevant only to their departments.. Similarly, a user from the legal department would only be able to see dashboards that relate to the legal department.
You can also configure emails to be sent out to your employees via automated email – even if those employees are not licensed Contract Insight users. For example, you can set a recurring email alert to prompt your CFO to review a dashboard displaying contracts by budget, and this alert can be configured to send weekly.
Organisations using launchpad dashboards give users the ability to view ad-hoc reports. Ad-hoc reports link to financial areas related to a contract in the form of summary tiles that contain information pulled from financial areas of the system.
Contract Insight offers several executive dashboards for different purposes. The Year Analysis Dashboard (as seen below) provides an overview of budget, contract and spend data. The dashboard conspicuously shows the total number of contracts from over the years an organisation has been using Contract Insight – allowing them to determine whether they have improved business or not. Furthermore, users can see the total contract amount within a given system. The dashboard also displays budget amount, contract amount, and spend amount in a graphical form so that the contract financials of a given year can be easily tracked.
You can configure the display of contract analytics according to your needs – such as having a dashboard present the contract amounts of only certain departments. Additionally, you can create new dashboards in addition to using the ones provided out-of-the-box – as their needs evolve.
Get started with transformed spend and financial management
Now that you are privy to how you can use advanced source-to-contract management software to track and report financials in one centralised location, it is time to take advantage of what Contract Insight from Four has to offer.
Contract Insight is a web-based (SaaS) or deployed (on-premise) contract management software solution. The acclaimed software platform is trusted by thousands of different professionals in the public and private sectors for contract management, procurement, sourcing and legal document management needs.
For more information, contact John O’Brien, CEO at Four Business Solutions, global business consultants and software integrators providing business processes improvements in Finance, Supply Chain and Operations, across a broad range of industries.